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Medicaid Planning & Your Trust - What You Need to Know

You may not realize it, but Medicaid planning and the process of planning your estate are very much related. Here's how to maximize the overlap.

Medical costs and unexpected health issues can make planning for the future a challenge for many families. That’s why the importance of Estate Planning cannot be understated -- not only does creating a Will or Trust help protect your finances but it also impacts your ability to pay for medical care. If you are planning ahead for yourself or helping to take care of a loved one, learning about Medicaid planning might help more than you think. 

Medicaid was created to help people receive medical care, though there are several eligibility requirements to be aware of. For many individuals, receiving Medicaid can cover the costs of long-term medical care and even assisted living facilities. Keep reading to learn more about how to maximize the benefits of your Estate Plan with Medicaid in mind: 

What Is Medicaid Planning?

Medicaid planning is the process of keeping as many assets as possible, while still falling within the limits necessary to qualify for Medicaid. Eligibility is income based, with certain asset limits determined on a state by state basis. Medicaid planning is a crucial process for individuals who may need financial assistance with medical care, but also want to maximize the assets they can leave behind for loved ones. 

Common Questions About Medicaid Planning And Estate Planning

Estate Planning will require you to take a closer look at your finances, health, and even your preferences on end of life care. If you want to ensure your eligibility for Medicaid, read through the following questions before you begin your Estate Plan: 

What Does Family Planning Medicaid Cover?

Family planning Medicaid covers a variety of services from participating providers in your state. While the exact coverage will vary, these are some of the services covered by family planning Medicaid: 

  • Health Education 

  • Cancer Screenings

  • Pregnancy and Preconception Screenings

  • Contraception and Sterilization

  • Health Testing and Treatment

Family planning Medicaid can make a big difference for individuals hoping to start or grow a family. Research your state-specific services to get a better idea of what to expect in your area -- and to find a list of providers you can go to if you are eligible. 

It is not uncommon to require financial assistance with medical care at different points in life. For example, you may be eligible when planning for a family and then over time no longer need Medicaid services. As you get older, you could then find you need assistance with long-term care or other medical expenses. This is why it is crucial to keep Medicaid planning in mind as you build your Estate Plan.  

Does a Trust Protect Your Assets from Medicaid?

A Trust can protect your assets from Medicaid by allowing you to distribute them to a loved one, and therefore still meet the eligibility requirements for the program. For example, if you place your assets in an Irrevocable Trust they will no longer legally belong to you. Once in the Trust, these assets would be designated for an independent trustee (which could be a loved one, child, or spouse). While you could still enjoy these assets in your lifetime, they would not be counted “against” you in terms of Medicaid eligibility. 

Medicaid does have a “look back” period to be aware of: this essentially allows any assets owned in the last five years to be considered when determining Medicaid eligibility. The purpose of this rule is to prevent individuals from giving away their assets or wealth in order to receive Medicaid. So, while a Trust could protect your assets the timing must be right in order to preserve your Medicaid eligibility. 

This begs the question, what assets are protected from Medicaid? Again, the specific eligibility requirements for Medicaid will vary from state to state. Though generally speaking, any of your assets could be considered including your house, car, bank accounts, and more. This is why so many individuals utilize Trusts when Medicaid planning -- and why you might even hear an Irrevocable Trust referred to as a “Medicaid Trust”. 

How Do I Protect My Home from Medicaid?

Estate Planning is the number one way to protect your home from interfering with your Medicaid eligibility. When you place your home in an Irrevocable Trust, it can no longer be considered when evaluating your Medicaid application (because you will no longer be the legal owner). However, depending on the Trust you can still continue to use the home for the rest of your life. 

Another option is to create a Life Estate, which is essentially a form of joint property ownership. This agreement will allow you to live in the property for the rest of your life, at which point it would pass to the other person. There are certain tax implications to keep in mind with each of these scenarios -- making it important to work with an Estate Planning lawyer as you consider your Medicaid planning. 

Should You Do Medicaid Planning? 

Medicaid planning is a great way to ensure you have the financial resources to cover your medical care later in life, while also setting aside funds for the next generation. It is a great tool to keep in mind when you begin Estate Planning, as these processes go hand in hand. If you think you might need extra help with the costs of medical care, nursing homes, or even assisted living: you should consider Medicaid planning. 

Keep in mind that the purpose of Medicaid planning is to ensure you have access to comprehensive medical care later in life, while also easing your financial worries about the cost. While deciding whether or not to utilize Medicaid will depend on your personal wishes, it is always important to consider all of the options that are available to you. By looking into Medicaid as you begin your Estate Plan, you can prevent a lot of stress down the line. 


The costs associated with medical care and assisted living are enough to make anyone fear getting older, but it doesn’t have to be as scary as you think. In fact, by utilizing Medicaid planning as you build your Estate Plan you can anticipate future medical costs and plan your finances accordingly. The best part is, our team at Trust & Will can help you through the entire process. Not only can Estate and Medicaid Planning provide you peace of mind about healthcare, it can also maximize what you leave behind for loved ones.